My first trip to Kashmir - Please advise!

I would be flying to Srinagar on 25th Dec 2011 with my family and would return back on 1st Jan 2012. Comments on the following would be very helpful :
(While suggesting please keep in mind that I am based in India and earn in INR )

1) Should I pre-book any accomodation in Srinagar? If not, please suggest some decent and resonable accomodation who has pick-up service from the airport.

2) Any suggestion about the itinerary would be highly appreciated.

3) Besides the famous tourist destinations, any other off beat and safe place to explore.

4) Any other advise that you may think of, like safely, dos and donts, etc.

Yes, I have gone through most of the relevant threads; Some were really helpful. But there are not many on my desired time frame (last week of Dec). And also would like to know more on the present state. Came to know that last week of Dec is off season, Whether pre booking of hotel is necessary or not. Can you suggest any decent hotel that have pick up service from Airport? ... Any other information that you can share would be helpful.

Kashmir with Vaishnodevi tour

I along with my family wants to visit Srinagar, Katra, Jammu in May 2011. Can any one help me out in itenary? Please also suggest some budget hotels and where to contact for car rentals. I was searching in net but all are so expensive. How come these travel agents take people in such less amount?